Speaker 1: Hello everyone, and welcome to another episode of the Market
Speaker 1: Disruptor Show. And today I am sitting down with my
Speaker 1: good friend Ken McIlroy. He is a real estate investor,
Speaker 1: very successful one with that. He is a real estate
Speaker 1: advisor for the Rich Dad Company um MC Companies. He
Speaker 1: speaks a lot about real estate on his own YouTube channel.
Speaker 1: You should watch him there. He's the one that gave
Speaker 1: him my cool new touch screen TV you've been seeing
Speaker 1: you with. Thank you again for them so that can
Speaker 1: and anyway, welcome to the channels. Pleasure to sit down
Speaker 1: with you today. Thank you, Thank you, Mark. It's been great.
Speaker 1: I'm enjoying everything and joining this time and really glad
Speaker 1: to be on your channel. Awesome, awesome. Well um yeah, man,
Speaker 1: you're you're You're so accomplished and I'd love just sitting
Speaker 1: down and just learning whatever I can from you. And
Speaker 1: so today is gonna be a big treat for everybody
Speaker 1: because I know they love my real estate content, but
Speaker 1: they're really gonna like yours, and so I'm happy to
Speaker 1: do that. But maybe just kind of fill us in
Speaker 1: real quick on maybe which has kind of been working
Speaker 1: on or what you're doing right now? Sure? Sure, Well,
Speaker 1: so you know, like a lot of us. I started
Speaker 1: investing years ago, and my first investment was using my
Speaker 1: own cash. You know, I bought a two bit in
Speaker 1: two Bath that cash flowed. So I've been a cash
Speaker 1: blow guy in my whole life. And um and then uh,
Speaker 1: you know, started doing a lot of the small single
Speaker 1: families and and do plexus and stuff. And then for
Speaker 1: about the last fifteen plus years, I've been doing multifamily exclusively.
Speaker 1: We own about ten thousand apartments were we build them,
Speaker 1: we manage them, we're the general contractor. We're in Texas, Oklahoma, Arizona, Nevada,
Speaker 1: Oregon and very active, you know, trying to buy multi
Speaker 1: family and build multi family. We have about um plus
Speaker 1: see five projects, so we have about FIFTUD units in
Speaker 1: the works on the construction side, and you know, we're
Speaker 1: really busy, and we're you know, obviously part of why
Speaker 1: I do what I do and you do what you
Speaker 1: do is that we're trying to figure out what to
Speaker 1: do next. You know, like, you know, how do you
Speaker 1: understand what's happening with all this crazy stuff with the
Speaker 1: evictions and the more the moratoriums on the loans and
Speaker 1: and and then the commercial side is just you know,
Speaker 1: nobody really is talking a lot about that. But that's
Speaker 1: a super scary area as well when it comes to
Speaker 1: office and malls and retail and so, um, you know,
Speaker 1: there's a lot happening right now and and um so
Speaker 1: I just really appreciate the content you're putting out and
Speaker 1: um you know, we're just trying to stay ahead of
Speaker 1: everything with you know, not only my money, but my
Speaker 1: investors money. You know. Hey, just a real quick interruption
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Speaker 1: block Fire, so check them out. Yeah. So, um, you're
Speaker 1: kind of all over the country and you've been across
Speaker 1: all different types of properties, and I think that's the
Speaker 1: first point that I would really like to drive home
Speaker 1: for people. So for everybody listening, just real quick, UM,
Speaker 1: I got a lot of stuff that we're gonna dig drough.
Speaker 1: So we're gonna talk about the different types of real estate,
Speaker 1: whether you want to own a home, invest in real estate,
Speaker 1: or different types of real estate to invest in. We're
Speaker 1: gonna talk about different ways you can do that, whether
Speaker 1: you own it directly or maybe through other groups. UM.
Speaker 1: We're gonna talk about what we expect to happen this year, UM,
Speaker 1: Ken and I might be seeing things a little differently,
Speaker 1: so we're gonna talk about that, um. And then we're
Speaker 1: gonna talk about, um some big news pieces that are
Speaker 1: driving real estate this week, and then where we think
Speaker 1: that's going. So lots of cover here, but can So
Speaker 1: you've you kind of worked your way up, as you said,
Speaker 1: with your own money. UM, and now you're doing doing
Speaker 1: the bigger deals, and you mentioned that you're across several states,
Speaker 1: So I would say it sounds like, you know, you're
Speaker 1: kind of watching and studying the market from a big level, right,
Speaker 1: trying to find where the best opportunities are. Y. Um,
Speaker 1: that I guess that's right. So um, I guess the
Speaker 1: first thing that I think that we would should probably discuss,
Speaker 1: and that most people don't seem to grasp, is they say,
Speaker 1: is the real estate market going to crash? And I
Speaker 1: would typically say that there is no such thing as
Speaker 1: the market. Right, There's thousands of markets and they all
Speaker 1: move independently. Would you agree with that? And if so,
Speaker 1: maybe I would absolutely Mark. Yeah. I mean people, you know,
Speaker 1: the the journalists separate like general, I mean, every everything
Speaker 1: aggregates up, you know to one thing. You know, but
Speaker 1: you know, I just if you go back historically, you
Speaker 1: just take a look at what happened to Detroit as
Speaker 1: an example, Detroit is the grating apple of a real
Speaker 1: estate market that crash, you know, uh years ago. And
Speaker 1: you know, while the a lot of the other markets
Speaker 1: have boomed in Boston, you know, for various reasons, and uh,
Speaker 1: you know, the real estate is very local driven right, yeah,
Speaker 1: and so by area, but also by type, whether that's
Speaker 1: a house or a duplex, a multi family, a commercial space, etcetera. So, um, yeah,
Speaker 1: I think that's the first thing. Is I just like
Speaker 1: to talk about that now. Um. We both recently have
Speaker 1: done videos kind of talking about the forecast for this year,
Speaker 1: and of course, uh, neither of us have a crystal ball.
Speaker 1: If we did, it would sure make things easier, but
Speaker 1: of course we don't. Um. In your video, you talked
Speaker 1: about how inventory has been super tight, but that you
Speaker 1: expect inventory to start coming back online this year. Maybe
Speaker 1: walk us through kind of yeah, So yeah, basically as
Speaker 1: we all know, I mean, inventory is a historical lows,
Speaker 1: forty year lows, and and I think that you know,
Speaker 1: last I looked, you know, there's like a million houses available.
Speaker 1: I read somewhere there's like, you know, five realtors for
Speaker 1: every house or something crazy, you know. So you know,
Speaker 1: and what's normal as as we all know, if you
Speaker 1: just use historical numbers as six months supply, and you know,
Speaker 1: we're basically under three, so somewhere between two and three
Speaker 1: depending on the market, very undersupplied, and then all the
Speaker 1: other people or having to you know, where near the
Speaker 1: where they were before, so they can move an hour,
Speaker 1: two hours, three hours away. And so we have all
Speaker 1: these migration patterns which I think probably will probably touch on.
Speaker 1: So all that stuff is happening at the same time.
Speaker 1: And then m you have cookering down and they have
Speaker 1: equity in their home and they're stick there's their standput
Speaker 1: and um and and these are people that would have
Speaker 1: normally I think, listed their homes, you know, I mean,
Speaker 1: there's a lot of things that that aren't happening normally
Speaker 1: and and so UM, I do believe that once the
Speaker 1: vaccine gets rolled out and things, you know, come back
Speaker 1: to whatever, you know, whatever the new normal is, then UM,
Speaker 1: I think people are gonna um you know, harvest some
Speaker 1: of the cash from their homes. With these low interest rates,
Speaker 1: they're gonna you know, they're gonna list. And then I
Speaker 1: also think that we're gonna have the people. Last I looked,
Speaker 1: we had somewhere in between three and four million people
Speaker 1: that were delinquent um. And then we have this massive
Speaker 1: rental eviction issue that um, you know, will create a
Speaker 1: lot of disruption as well. So I think all of
Speaker 1: those things are going to add more supply. Um, you know,
Speaker 1: how much you know, who knows and by what market.
Speaker 1: To your point earlier, you know, there are going to
Speaker 1: be some markets like California that will be in trouble,
Speaker 1: but there will be other markets that have done really,
Speaker 1: really wild that won't be. So you know, it's gonna
Speaker 1: to be state by state, city by city, county by county.
Speaker 1: But yes, there's gonna be I believe a lot of
Speaker 1: a lot of inventory that's gonna hit the markets. Uh,
Speaker 1: I predicted in the in the fourth quarter. Yeah. To
Speaker 1: to add on to your point, I would say that
Speaker 1: we did see when the pandemic first broke out last
Speaker 1: year in March um that we saw him I believe,
Speaker 1: and you can correct me if I'm wrong, but I
Speaker 1: believe we saw more inventory pulled off the market than
Speaker 1: like any time in history. Yes, that's exactly my point. Yeah, yeah,
Speaker 1: and I don't believe. I mean, you can't blame those people.
Speaker 1: They're like, Okay, we may or may to have work.
Speaker 1: You know, our employers may or may not survive. We
Speaker 1: have we've you know, if you look at equity in
Speaker 1: people's homes, they've they've done pretty well. And that's actually
Speaker 1: that's actually the best thing that's happened is people have
Speaker 1: you know, call it this this bank account. They don't
Speaker 1: get to get it unless they sell it or refin dance.
Speaker 1: But you know it's sitting there. And that actually is
Speaker 1: way better than what happened in two thousand and eight
Speaker 1: when I went through, you know, a very different correct
Speaker 1: should So I think that's a good thing and and
Speaker 1: that actually will I believe will really help. But people,
Speaker 1: you imagine if you've got a bunch of equity in
Speaker 1: your house, you know, and you don't know where you're
Speaker 1: gonna work. As an example, I don't know that you're
Speaker 1: going to lift your house. Uh you know, because now
Speaker 1: you're you're gonna harvest it, you're gonna pay capital game tax,
Speaker 1: and you know you have to figure out where to
Speaker 1: going next. Right, Yeah, everything in life comes down to certainty.
Speaker 1: So the more certain you are with your life, the
Speaker 1: longer out you can plan, and the less uncertain you
Speaker 1: are than the less you can plan. So extreme examples
Speaker 1: of that would be if I was in a country
Speaker 1: like Syria that's being bombed right now and I'm literally
Speaker 1: fleeing for my life with my family. The last thing
Speaker 1: I'm trying to do is like worry about saving money
Speaker 1: from my future, Like my future is so uncertain, that's
Speaker 1: the last thing I'm worried about. And so, Um, to
Speaker 1: your point, there was a lot of uncertainty that was
Speaker 1: going on for any number of reasons. I'm scared to
Speaker 1: go out of my house. I don't want other people
Speaker 1: to come in my house. I don't know what the
Speaker 1: future and all these things, and so people decided to
Speaker 1: do that. But I guess to add on to your point, Um,
Speaker 1: we know that people wanted to sell their house before
Speaker 1: the pandemic and it came off the market and so
Speaker 1: there so it's reasonable to expect that once this gets cleared,
Speaker 1: that inventory will go back onto the market. Now, one
Speaker 1: theme that for everyone listening, one thing that you're gonna
Speaker 1: hear over and over and over is that it's all
Speaker 1: about supply and demand, and so everything that we're talking
Speaker 1: about is affecting supply and demand at some point. Um.
Speaker 1: But um, one thing that I hear when I talk
Speaker 1: about real estate, and you can let me know if
Speaker 1: you hear the same thing, and I'm sure you do.
Speaker 1: But everybody is expecting this this massive amount of unemployment
Speaker 1: and specifically the record amount of forbearances and rent moratoriums.
Speaker 1: They are all expecting that to just come onto the
Speaker 1: market and just crash it. And I think you're kind
Speaker 1: of expecting maybe the same thing. So it's interesting. It's
Speaker 1: going to depend on There's a lot of factors that
Speaker 1: have to do with that. Obviously. I think most people,
Speaker 1: if you look at the if somebody's in their home,
Speaker 1: they're gonna hold on and they're gonna do whatever they
Speaker 1: have to do. And so they're all gonna trickle out
Speaker 1: based on what happens. And there's a lot of people
Speaker 1: that you know, believe that some of the forbearance is
Speaker 1: just gonna be thrown onto the end of the loan
Speaker 1: um and uh, but you know, that's a very small percentage,
Speaker 1: as you know, you know, and and so there's a
Speaker 1: lot of mortgages out there that are non government mortgages,
Speaker 1: and and so while there's a you know, the forbearance
Speaker 1: is certainly in place right now, Um, you know, there's
Speaker 1: a lot of private lending, a lot of private money
Speaker 1: out there, you know, kind of sitting back on the
Speaker 1: sidelines and trying to figure out what to do next. So, um,
Speaker 1: so I don't know if it's all going to come,
Speaker 1: but I do think. You know, obviously Biden kicked everything
Speaker 1: down the road till till June, you know, and so
Speaker 1: when I originally did that video, as you know, that
Speaker 1: was prior to him even kicking it down the road
Speaker 1: to June. So, uh, you know, I was interesting. As
Speaker 1: you know, I was with George Gammon last weekend up
Speaker 1: in Park City, and you know, we got as a
Speaker 1: big discussion as as you know we all do when
Speaker 1: we get together, trying to tap into everybody's resources, and
Speaker 1: George said, you know, personal incomes were way up, you know,
Speaker 1: during all of this, during this whole pandemic, personal incomes
Speaker 1: are way up, and you gotta wonder why, Like you know,
Speaker 1: like with all this unemployment, and you know, all these
Speaker 1: businesses that are going out and and and people are
Speaker 1: going to part time and all that kind of stuff.
Speaker 1: You know, that's all been propped up by the government.
Speaker 1: And uh, there's no doubt around that. And so when
Speaker 1: when the when the new checks came out and uh,
Speaker 1: you know, all those things happen. You know that, believe
Speaker 1: it or not. As a landlord, that actually was good
Speaker 1: because those people take that money they pay their rent.
Speaker 1: Uh you know, but at some point you gotta wonder,
Speaker 1: you know, how long is the government going to be
Speaker 1: issuing these checks? And that's what I was trying to
Speaker 1: get at. So will it all hit in the fourth quarter?
Speaker 1: Probably not, but it's if they don't kick down the
Speaker 1: road again, I would expect that you these things are
Speaker 1: going to have to work themselves out well. Um, just
Speaker 1: like George, I spent a lot of time studying with
Speaker 1: the Fed, FED is doing, the Central Banks and the
Speaker 1: Federal Reserve, and so, UM, it just seems to me,
Speaker 1: I mean, they've they've passed their nine billion, another one
Speaker 1: point nine trillion is about to come through. I think
Speaker 1: there's another potentially three trillion there negotiating but coming out
Speaker 1: with next I just don't think that they've come this
Speaker 1: far to let it fall apart at this point. In
Speaker 1: addition to that, um, if the stock market and the
Speaker 1: real estate markets were to crash hard, debt to GDP
Speaker 1: levels would skyrocket to a level that would probably wreck
Speaker 1: the country. And so they're they're kind of forced in
Speaker 1: a way. I just don't think they would let it go.
Speaker 1: But we don't know. But one thing I would also say, though,
Speaker 1: is it and you can see what you've I know,
Speaker 1: You've looked at the data more than I have on this,
Speaker 1: but it seems like the people that are affected, the
Speaker 1: people that have lost their job, the people that are
Speaker 1: still unemployed, are mostly service level jobs, service sector jobs,
Speaker 1: and so maybe a lot of those people one don't
Speaker 1: own homes, and two if they do own homes, there
Speaker 1: are only in certain price points and markets. Um, what
Speaker 1: do you think about that? Hey, just another quick interruption
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Speaker 1: and fifty dollars today, you start to look at these,
Speaker 1: um you know, that's obviously on the higher end side,
Speaker 1: you know, companies like JP Morgan, which I know we
Speaker 1: were talking about before, or Goodman Sacks, and you start
Speaker 1: to look at these big, big companies that are based
Speaker 1: in you know, it's not just all about New York
Speaker 1: with Chicago, and I have friends that are that have
Speaker 1: spaces in those in those in those markets, and they're
Speaker 1: paying rent and none of their employees are going to
Speaker 1: the office and and so you know, that's you know,
Speaker 1: that's all the stuff that no one has really talked
Speaker 1: about yet. And so you're right, it's definitely at the
Speaker 1: lower end for sure. And those are the ones that
Speaker 1: show up first. But then there's a whole troncha people
Speaker 1: I think that are are displaced right now, that are
Speaker 1: trying to find their way. And I got seventy resumes
Speaker 1: from my CEO position and none of them from a
Speaker 1: local area. Wow. Okay, so let's let's chase that down
Speaker 1: a little bit. So there's great migration, right, Everybody wants
Speaker 1: to get the heck out of Dodge, right, They're leaving
Speaker 1: New York and they want to migrate to these areas.
Speaker 1: And so, um, we were talking earlier about this headline
Speaker 1: I saw with JP Morgan and putting up like eight
Speaker 1: hundred thousand square feet of office space. We've seen most
Speaker 1: of Wall Street, Goldman Sacks, even the New York Stock
Speaker 1: Exchange are announcing their all moving down to Florida. People
Speaker 1: trying to go to Arizona where you're at. Talk about
Speaker 1: this great migration a little bit. It's true, you know,
Speaker 1: I think you probably saw the news. It's a it's
Speaker 1: a bit dadd now, but Pinterest wrote a ninety million
Speaker 1: dollar check to get out of their lease in San Francisco. Uh,
Speaker 1: you know, and and so you start to see, you know,
Speaker 1: I'm in the commercial space primarily, so I own office buildings,
Speaker 1: we have self storage, I do land development. And obviously
Speaker 1: what I've primarily known for what I do is multi family.
Speaker 1: And that's also a different issue. I have friends that
Speaker 1: are all multi family in Chicago and New York and
Speaker 1: and in in San Francisco and Attle and and they're
Speaker 1: in troubble obviously for multiple reasons. And so I think that, uh,
Speaker 1: and the hotel business, you know, those little micro hotels
Speaker 1: are just getting crushed right now because you can't survive
Speaker 1: on ten, which you're where they are. And so all
Speaker 1: of that's happening, and I think the migration patterns are
Speaker 1: I think it's fascinating personally. I think the fact that
Speaker 1: you know, you can you can go to be a worker,
Speaker 1: let's say, for Twitter and and live in Texas now, right,
Speaker 1: So I think that's awesome. And the fact that but
Speaker 1: it is going to make a massive real estate impact
Speaker 1: for obviously San Francisco, as you know, just to pick
Speaker 1: on them, but things are happening like that all over
Speaker 1: Mark even my own company. You know, we're taking a
Speaker 1: look at this hybrid model. You know, we have a
Speaker 1: lot of space. And I have every conversation I have
Speaker 1: with my friends, they're like, okay, well all my people
Speaker 1: have been home for a year almost so how much
Speaker 1: space do I really need? And so at the end
Speaker 1: of their leases, they're going, well, you know, I had
Speaker 1: twenty thousand, now I'm out five, you know, and and uh,
Speaker 1: it's really really interesting. I think, what what you're going
Speaker 1: to start to see. I was actually playing golf with
Speaker 1: the one of the top guys that Freddie Mack and
Speaker 1: he you know, he's in Arizona, of all things, and
Speaker 1: him and his wife ought a place out here. He
Speaker 1: flies back. I said, what are you gonna do with
Speaker 1: that massive campus? And he said, well, I think what
Speaker 1: we're gonna do is we're gonna put a hotel. We're
Speaker 1: gonna put some hotels in there and make it all
Speaker 1: more like a conference center, you know, just for Freddie mckinploy.
Speaker 1: So you can fly in, you know, uh, stay there, go,
Speaker 1: you know, meet when you need to meet, and then
Speaker 1: fly back to where you are. And so I think
Speaker 1: you're gonna see this repurposing of real estate. You know,
Speaker 1: we're certainly seeing with the regional malls already, which we're
Speaker 1: already in trouble pre you know, Preak COVID, and so
Speaker 1: it's it's an exciting time for real estate investing. In
Speaker 1: my opinion. Well, anytime there's change, it creates opportunity. And
Speaker 1: so as an investor, no matter what market you're in,
Speaker 1: you're looking for that change because that's where the opportunity
Speaker 1: is going to be if you get it right and
Speaker 1: you can get there before it. I think it was Buffet,
Speaker 1: you know whoever said that the markets are discounting mechanisms, right,
Speaker 1: So you're trying to get a discount on what the
Speaker 1: future is gonna hold. But I would say, just to
Speaker 1: add to that, UM, I was already tracking this great
Speaker 1: migration from what the baby boomers. They're all retiring and
Speaker 1: they all want to sell their McMansions, and they all
Speaker 1: want to move somewhere where it's sunny and they can
Speaker 1: play golf in tennis during a sixty five days a year.
Speaker 1: We already had that going on, and now you're adding
Speaker 1: on the COVID work from home kind of thing on
Speaker 1: top of that, and so it's a powerful, powerful trend.
Speaker 1: So UM, I guess let's wrap it up with that
Speaker 1: and just say, UM that anybody looking at real estate
Speaker 1: needs to understand it's local and they need to understand
Speaker 1: these supply and demand tricks. UM. Now, if we want
Speaker 1: to UM kind of take it a little bit for farther.
Speaker 1: So people who are interested in this topic, let's talk
Speaker 1: about different ways that they would buy real estate. So
Speaker 1: first off, they would have like their home. So if
Speaker 1: you're if you want to buy a home, so a
Speaker 1: lot of people are going, should I buy a home
Speaker 1: this year or not? Rates are cheap? Should I lock
Speaker 1: it in? Um? I don't believe that you should look
Speaker 1: at as an investment. You need to look at as
Speaker 1: a home. So what what do those people need to
Speaker 1: be looking at or thinking about in that regards And
Speaker 1: and do you kind of agree with kind of the
Speaker 1: the it's an it's an asset not a liable or
Speaker 1: it's a liability not an asset type of thing. Yeah,
Speaker 1: well a great question, by the way, because I think
Speaker 1: that's what's kind of everyone's facing right now. And I
Speaker 1: think there's a big affordability issue happening right now. You
Speaker 1: look at personal savings are way up, and which is good.
Speaker 1: That's finally we you know, people are saving money, which
Speaker 1: they need to do for these kinds of you have
Speaker 1: cash reserve. Um, but I agree with you. I think
Speaker 1: that people should live where they want to live, and um,
Speaker 1: you know, they should live within their means, and they
Speaker 1: should have enough cash reserves and they should be where
Speaker 1: they want to be. And I think this is the
Speaker 1: exact time to be able to figure that out. And
Speaker 1: that's why Idaho and Montana are blowing up. And that's
Speaker 1: why I'm Wyoming. And you know these little places that
Speaker 1: you know where fly our states basically you know, are
Speaker 1: are really on fire, you know, these little, small little suburbs.
Speaker 1: You know, I I live in the Northwest in the
Speaker 1: summer because Arizona is just so crazy, and um, you know,
Speaker 1: it's it's not what's happening in in a lot of
Speaker 1: these little markets. These are markets that I go to,
Speaker 1: I I keep track of, uh, and and it's happening
Speaker 1: all over Oregon, all over Washington and these small little things.
Speaker 1: So that's what's happening. And I agree with you people.
Speaker 1: I always say your house, even for me, my house
Speaker 1: is my house. It's not on the table from an
Speaker 1: investment standpoint. With that being said, you don't on a
Speaker 1: you know, people are always trying to time things. I
Speaker 1: think with inflation, uh and the low cost of the
Speaker 1: borrowing that, um, you're gonna be just fine. You know.
Speaker 1: Like if you buy something that's a half a million
Speaker 1: box or two grand or whatever, no matter where it is,
Speaker 1: and you throw some debt on their two and a
Speaker 1: half percent fix, I think you're gonna be just fine.
Speaker 1: Based on all the money printing that we've got going on,
Speaker 1: you know, you're gonna hit You're gonna be hedged on
Speaker 1: the six of that seventy percent. Let's say, or eating
Speaker 1: um by using somebody else's money anyway. So really you're
Speaker 1: only you're only messing around with that down payment piece,
Speaker 1: and inflation is gonna gonna push everything up personally. You know,
Speaker 1: I believe we're already seeing it. You know, I'm building,
Speaker 1: I'm building properties on one property units. I'm a million
Speaker 1: dollars high on my on my lumber. You know, it's
Speaker 1: just lum and you know, so you're already seeing these
Speaker 1: uh you know components. Um. I read from the National Mortgage,
Speaker 1: National Housing. I'm sorry, the National home Builders. The average
Speaker 1: home is now fourteen thousands higher as a result of
Speaker 1: the components from where it was pre COVID. So that's
Speaker 1: a lot. Yeah, definitely. Yeah. So I would say, let's
Speaker 1: let's we'll table that and just say, if you're thinking
Speaker 1: about owning the home, to live in it, and it's
Speaker 1: your home, as you made the perfect case. And I
Speaker 1: hadn't really thought about that. All these people that wished
Speaker 1: they could live in Wyoming or wish they could live
Speaker 1: in id Hope, but there's no jobs there. Now they
Speaker 1: can right now they can live in idho and still
Speaker 1: working in Silicon Valley, right and so they or work
Speaker 1: in New York City from from some Idah. So that's
Speaker 1: a good that's a good point. And so if you
Speaker 1: can live where you want to live in locking historic
Speaker 1: rates and you want to live there forever, then who cares.
Speaker 1: Um An example for myself is um as you know,
Speaker 1: I just moved out of the country. I just moved
Speaker 1: from California to um to Puerto Rico, and we're getting
Speaker 1: ready to move out of the country, and all of
Speaker 1: a sudden, in my area on the beach, a property
Speaker 1: came up for sale. The last thing from my mind
Speaker 1: is buying a house at this point, and I'm just like,
Speaker 1: I want that house. I want that I want the lot.
Speaker 1: I want that lot that that house is on. And
Speaker 1: my wife's like, what are you talking about? Like, I'm like,
Speaker 1: this will probably the worst time to buy. I'll probably
Speaker 1: be an idiot. The market will probably crash, but I
Speaker 1: don't care. I don't care if the market drop. If
Speaker 1: I can lock in the rate and get that property,
Speaker 1: I want it. And so I didn't end up getting it,
Speaker 1: by the way, But my point being, if it's a
Speaker 1: place that you want and you've can lock it in
Speaker 1: and you don't care if the price goes down then, Um,
Speaker 1: I would I would probably say by and on top
Speaker 1: of that, um and my real recent real estate video,
Speaker 1: I made the case that a house I owned in
Speaker 1: two thousand seven, I had a one point five million
Speaker 1: dollar loan. It was about ten thousand dollars a month.
Speaker 1: Today that same ten thousand dollars I mean two and
Speaker 1: a half million, right, so being able to lock it
Speaker 1: in these rates, especially this week we've seen rates going
Speaker 1: back up. What do you think the rates going back
Speaker 1: up will do to the homes? You think it how high?
Speaker 1: I guess do you think it needs to go up
Speaker 1: before maybe that starts to make an impact? Right? Well,
Speaker 1: it's interesting. I just was listening to something about this.
Speaker 1: I guess how wun't spoke to, you know, somebody you know,
Speaker 1: Wall Street Journal, convention and and and raids jumped up.
Speaker 1: Uh you know, uh they're still incredibly Lowmark. You know,
Speaker 1: it's funny like as I, you know, as as Ross
Speaker 1: and I were buying all that real estate. We you know,
Speaker 1: we're buying it, you know, four and a half, five
Speaker 1: and half even six. We were happy then. You know,
Speaker 1: now it's lit even more so. Our cash, our reefies,
Speaker 1: you know, are better we're actually we don't want to
Speaker 1: get more out. So um, yes they're up, but they're
Speaker 1: still so low. Uh, you know, and I think that
Speaker 1: you're going to start to see them bumping up. But
Speaker 1: what does happen To answer your question, Obviously, whenever anything
Speaker 1: goes up like that, that's the cost of money. Then
Speaker 1: you know, things slowed down even just a little bit.
Speaker 1: So maybe that person that was right on the edge
Speaker 1: to be able to buy something, you know, now can't
Speaker 1: because that rates higher. It could be a car, could
Speaker 1: be a house, you know, and and so it'll be
Speaker 1: interesting to see, you know, where rates go. I can't
Speaker 1: imagine during all of this that they're going to increase rates,
Speaker 1: you know though, as we still have you know a
Speaker 1: lot of people, um that are unemployed, and we still
Speaker 1: have a lot of disruption happening, and and and for
Speaker 1: them to raise rates, um, you know, at least over
Speaker 1: the short term would be a really really bad idea. Well,
Speaker 1: I don't think the FED will They said they're not
Speaker 1: even thinking about thinking about raising rates. So I mean
Speaker 1: it could be five years, they've said at least five years.
Speaker 1: I think rates will go down, but the mortgage rates
Speaker 1: don't track the FED fund rate exactly. So we'll see
Speaker 1: what happens with that. But let's jump let's jump gears
Speaker 1: a little bit, and let's leave residents. We kind of
Speaker 1: covered for the people that want to buy a house
Speaker 1: to live in it. But now what about real estate investing?
Speaker 1: Now I've invested. I was investing in real estate from
Speaker 1: I did really good for a decade through about two
Speaker 1: thousand five two six. Obviously two tho was horrible. But
Speaker 1: what I learned is that, uh, there's no such thing
Speaker 1: as good and bad timing, just good and bad strategies.
Speaker 1: And I don't know if you agree with that, but
Speaker 1: right now there's I think certain real estate strategy investing
Speaker 1: strategies that would still work today and probably some that don't.
Speaker 1: Do you agree with that, and if so, which strategies
Speaker 1: do you think are probably the best for people to
Speaker 1: kind of think about based on our migration patterns. And
Speaker 1: I know you watch I watch that's gonna create bubbles
Speaker 1: and depressions. You know, people are gonna be moving out
Speaker 1: of areas and they're moving into other areas, and that's
Speaker 1: you know, so you've got to really be cognizant of
Speaker 1: where people are heading. And if you're if you can
Speaker 1: be there and catch that, then you're gonna do very
Speaker 1: very well, even during this pandemic. Okay, Um, it seems
Speaker 1: to me like I I probably did a hundred hundred
Speaker 1: and fifty fix and flips, but I don't know if
Speaker 1: now is the best market to be doing those today.
Speaker 1: I would agree with you, I would agree. I mean,
Speaker 1: you know, it's the problem with that is that it's
Speaker 1: a you've got the timing issue right, and and so
Speaker 1: you know, it depends on how long I suppose, and
Speaker 1: and then also you have the tax piece now, which
Speaker 1: is up for grabs, I guess, you know, and so uh,
Speaker 1: you know, there's it takes. You want to make sure
Speaker 1: that when whatever you're buying, it's gonna be worth a
Speaker 1: lot more than you know, what you're paid, and and
Speaker 1: and and because of where things are with inventory, i'd
Speaker 1: be careful with that, you know, especially um, with what
Speaker 1: we kind of started talking about earlier on inventory. So
Speaker 1: then investing for income is the strategy that I like?
Speaker 1: Is that the strategy that you like a d percent?
Speaker 1: And that's actually been my strategy the whole time. I
Speaker 1: like you and I don't. We've talked about this. I
Speaker 1: look back sometime times that the properties that I owned,
Speaker 1: and I'm like, man, I wish I still owed that,
Speaker 1: you know, I mean, I do that all the time,
Speaker 1: and and and and you know, I've had a great career.
Speaker 1: It's been wonderful. But the stuff I've kept has, you know,
Speaker 1: and cash flowed over the time has been by far
Speaker 1: the best strategy. So, UM, if I want to invest
Speaker 1: for cash flow, I want to I want to invest
Speaker 1: in a place that I believe the cash flow has
Speaker 1: a good long term demand. Like, I don't want to
Speaker 1: invest in a in a in a city that's dying
Speaker 1: and nobody's gonna be there and in a few years, right,
Speaker 1: I want to move somewhere that has long term demand.
Speaker 1: So that's the migration thing you talked about for me.
Speaker 1: I kind of like the entry level because people are
Speaker 1: always coming up and people are always coming down. There's
Speaker 1: always demand for that entry level. Um. But then what
Speaker 1: I've been kind of wrestling with lately, and I'd like
Speaker 1: your opinion on this, I've always liked to own everything. Um.
Speaker 1: I just sold an apartment building in Indianapolis two months ago,
Speaker 1: and it just became too much work, even with my
Speaker 1: property managers in place, and I just couldn't even manage
Speaker 1: my property manager, and I just don't want to deal
Speaker 1: with it. And so I've been thinking about shifting that
Speaker 1: into more like syndicated deals instead of me owning and
Speaker 1: managing everything, going into bigger deals where I can do
Speaker 1: you know, big apartment complexes, things like that. What do
Speaker 1: you think? What do you think about those two options
Speaker 1: for the average kind of person. Well, first of all,
Speaker 1: I completely agree with your entry level piece. You work
Speaker 1: rash and I'm known as workforce housing guys. So you know,
Speaker 1: we we build what we call a minus, you know,
Speaker 1: and that's what we build. And we try to buy
Speaker 1: stuff that we can be right underneath, you know, the
Speaker 1: really high and glitzy stuff. We want to be two three,
Speaker 1: four hundred dollars a month less on a rental side. Um.
Speaker 1: And so I completely agree with your strategy there um.
Speaker 1: And I think that you know, it's the management piece
Speaker 1: is you know, it's a real piece. It's a big deal.
Speaker 1: I was fortunate markets you know that I came up
Speaker 1: in the property management world operationally. I started managing properties
Speaker 1: when I grew up in Seattle, and I was doing
Speaker 1: that in college, and and and and so for the
Speaker 1: first ten years of my career I did that and so,
Speaker 1: uh so it's really a much much easier for me
Speaker 1: to be able to drop in and manage a manager,
Speaker 1: which in some cases, like when we're buying stuff in Oklahoma,
Speaker 1: we actually used a third party manager. Um and in
Speaker 1: in Texas we actually bought a management company and and
Speaker 1: rebranded it. It's the key to everything. But if you
Speaker 1: don't have the uh you know, the time and the
Speaker 1: and the experience around it, it can be daunting because
Speaker 1: you know, these little decisions that are being made. Luckily,
Speaker 1: because of my experience, I can challenge them and and
Speaker 1: you know, I can, I can drop into any property
Speaker 1: anywhere and have a one on one with the manager
Speaker 1: and and you know, and because I've been there before,
Speaker 1: I've done it. I have a trying tremendous amount of experience.
Speaker 1: So we have a management company, but it's finding a
Speaker 1: good property manager man is the hardest thing ever. It's
Speaker 1: the most questioned thing that we get. I get probably
Speaker 1: every week somebody asking me to manage their stuff, and um,
Speaker 1: you know, but we only do our own. And but
Speaker 1: for those people that don't want that, and we have
Speaker 1: thousands of investors that to your point that they just
Speaker 1: they they put the money into this into the syndication.
Speaker 1: The one thing you've got to be careful of is
Speaker 1: sometimes the syndicators don't have that management experience and so
Speaker 1: they do it themselves too. So you can give us
Speaker 1: indicator money and the deal might be great, Uh, you know,
Speaker 1: my pencil out and all that kind of stuff, but
Speaker 1: then they're not pulling the cash out on the management side.
Speaker 1: All right, Ken, Well, that's a lot of good information
Speaker 1: that you've given us. UM, let's go ahead and try
Speaker 1: to summarize this and kind of wrap this up. So UM,
Speaker 1: as a homeowner, they probably want to go ahead and
Speaker 1: buy if they want to live their luck in those
Speaker 1: new rates. If want to invest, UM, they want to
Speaker 1: invest into areas that are growing, and they want to
Speaker 1: invest for cash flow. Give us some ideas of where
Speaker 1: people would get this information, what they should be looking,
Speaker 1: and how they might want to kind of approach that. Sure, well,
Speaker 1: I think that you know, when you're looking to obviously
Speaker 1: invest in whatever it is that you're investing, and you
Speaker 1: want to go to where the people are going population growth,
Speaker 1: employment growth and all of those things. And I think
Speaker 1: that's probably the number one thing that people miss is
Speaker 1: that you know, you want to go as Wayne Gretzky says,
Speaker 1: you know when he was why are you such a
Speaker 1: great hockey player? Well, I always skated to where I
Speaker 1: thought the puck was going to be. And I think
Speaker 1: that people missed that, you know, they they kind of
Speaker 1: get on this herd mentality and and you know, all
Speaker 1: so and solce buying. You kind of have to look
Speaker 1: at the bigger picture, so you know, and and then
Speaker 1: of course, um, you know, I I tracked that stuff
Speaker 1: through the you know, there's a ton of stuff on
Speaker 1: migration on line. There's a ton of stuff on the
Speaker 1: on the BLS website and the Census websites, the Black
Speaker 1: Night Helps you know, on the mortgage for foreclosures, and
Speaker 1: the National Multi Housing Council on the on the evictions
Speaker 1: and all that kind of stuff. All of this has
Speaker 1: to do with what's gonna happen, you know, And and
Speaker 1: you know, we we do have a Ken McRoy dot com.
Speaker 1: We have uh I uh, we have a market Disruptor
Speaker 1: piece that you know, your your your folks can download
Speaker 1: if they like you just go to Kim macroy dot
Speaker 1: com slash market Disruptor and you can kind of take
Speaker 1: a look at some of the things that you know
Speaker 1: that we what we take a look at that hopefully
Speaker 1: will help them make the really good decisions. Yeah, awesome, awesome. Well,
Speaker 1: it's a big subject and and like like like anything,
Speaker 1: you should need to educate yourself before you make these
Speaker 1: big decisions. And so hopefully this conversation has definitely helped
Speaker 1: you out. Now. I know you talked about Kim McRoy
Speaker 1: dot com and that market disruptor piece that's eight. Obviously
Speaker 1: your YouTube channel has a ton of great information as well.
Speaker 1: Anything else that you want to kind of throw out
Speaker 1: where people could follow you, Yeah, yeah, just uh well
Speaker 1: mc Companies is our company, if you want to take
Speaker 1: a look at what we're doing, you know, on an
Speaker 1: investment side. The but most of the education stuff is
Speaker 1: that we're on kin mac dot com. And I just
Speaker 1: want to say, this is the greatest time, guys, even
Speaker 1: though things are really high and you know, and there's unemployment.
Speaker 1: The rates are low though, and it's the greatest time
Speaker 1: to be able to there's gonna be a lot of
Speaker 1: money changing hands in the next four or five years.
Speaker 1: And and the key to this whole thing, in my opinion,
Speaker 1: the people that will emerge are the people that are
Speaker 1: going to be studying and staying ahead of this. I'm
Speaker 1: telling you, so congratulations on on on watching this kind
Speaker 1: of stuff. If you continue to study, you'll stay ahead
Speaker 1: of this great Thanks so much, Ken. That's ah, that's
Speaker 1: that's such great advice to leave with. It's the days
Speaker 1: of just closing your eyes and throwing a dark are over.
Speaker 1: But if you put the time in the effort and
Speaker 1: like Ken just suggested, uh, you have a great opportunity.
Speaker 1: So without go ahead and wrap it up. Thanks so much, Ken,
Speaker 1: appreciate your time, my pleasure. Mark always great talking to
Speaker 1: you man. Yeah,